- Associated Press - Tuesday, February 18, 2014

COLUMBIA, S.C. (AP) - South Carolina’s towns and counties would no longer be able to charge taxpayers a processing fee for credit card payments under a proposed ban in the state budget.

The House budget-writing committee defeated on Tuesday defeated an effort to remove the ban from its 2014-15 budget plan. The proposed clause would require any local government now collecting payments by credit card to continue doing so, but without charging. Ignoring the ban would result in a reduction in state aid.

“When people are paying their taxes by credit card, you don’t whack ‘em again with a fee,” said Rep. Jim Merrill, R-Charleston.

But Rep. B.R. Skelton, R-Six Mile, argued the ban would cut into Pickens County’s tax collections, since its 1.9 percent fee is charged by the processing vendor, Paypal, not the county. Last year, 19,000 people in his county alone paid on credit, he said.

“The county gets zero money,” he said. “The processing fee is for the convenience of the paying customer. They’re not paying their full tax if counties aren’t allowed to add it on.”

But Merrill contended governments should make the payments as easy as possible, saying there’s nothing convenient about paying taxes.

Keeping the ban in place was a bipartisan effort, with Democrats arguing credit card payments provide an option for those who can’t afford to pay the full tab at once.

That’s why local governments that provide the option have higher collection rates, said Rep. Leon Stavrinakis, D-Charleston.

“They save a ton of money out of collection and other processes people go through if they can’t afford to write a check,” he said. “Most people who pay by credit card are doing so because they’re struggling to pay their taxes. So a fee that increases the balance even higher is just not right.”

At least 40 of South Carolina’s 46 counties charge a credit card processing fee, according to the state Association of Counties.

Legislators who advocated for the ban said some governments are making a profit off the fees. But the association says it’s unaware of any county charging fees in excess of what the processing costs them.

Stavrinakis noted the state Department of Revenue doesn’t charge a fee for paying taxes by credit card.

“If we can do that, counties and local government can do it too,” he said. “If it’s good enough for the state to do it this way, it’s good enough for the locals.”

The discussion came on the opening day of budget talks in the full House Ways and Means Committee. Work on its budget plan continues Wednesday.



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